Philippines surpasses market expectations with 7.8% GDP

Find out the key growth drivers.

In a release, Philippines Secretary of Finance Cesar V. Purisima said that the country's first quarter growth of 7.8% has exceeded all but the highest forecasts and projections. 

He noted that fiscal space from a robust growth in its revenue collections drove a substantial expansion in government expenditures (13.2%) and public construction (45.6%).

Along with the country’s first investment grade rating by a major ratings agency, he stressed that "good governance is good economics."

Here's an excerpt from his statement:

The growth in the manufacturing and construction sectors—9.7% and 32.5% respectively—shows that investors are truly putting their faith in the Philippines for the long term, and not merely speculating on our markets.

Our government’s goal from day one has been to restore confidence in the Philippines, and the numbers in this growth report show that it has, indeed, returned.

I would like to highlight the 47.7% growth of capital formation, especially the 16.8% growth of fixed capital fuelled by 30.7% increase in private construction, 45.6% increase in public construction and 9.4% increase in durable equipment, shows that we are increasing the productive capacity of the economy, laying the foundations for sustained growth in the future.

We are happy with the growth coming from our two priority sectors—agriculture and tourism—and with the investments, both from the private and public sector, lined up, we believe we can further expand economic productivity in these two areas, which also have the greatest reach to empower the poorest communities.

It is also interesting to note that the remarkable growth during the first quarter came despite contractions in mining and exports. This should be a cause for optimism.

As the global economy shows signs of recovery, we expect exports to pick up, and with the coming finalization of rules governing the mining sector we expect to unlock another highly potent growth driver.

The future is bright as our fiscal strengthening has only gained momentum—last April, we recorded the highest ever fiscal surplus for that month on the back of intensified tax collection efforts. We will continue to drive revenue performance with information, intelligence, and a strong rule of law.